 Now, we will look at the organization design. If we have to make changes in the organization design, we need to understand the different types of organization design and then we will look at what should be the approach of designing or redesigning of any organization. Most basic design of organization can be the functional design or functional organization where there is one head of the organization to whom different heads the heads of the different functions are reporting. This is the pictorial representation of the functional organization where different functions are held by the managers and they all report to one head of the organization. There are certain disadvantages and advantages of having functional organization. Generally organizations start with the functional design when a new business is set up, generally it is started is to establish as a functional organization. There are advantages to the functional forms of organization. It promotes the skill specialization because people keep working in one department and when they keep working in the one department, they keep getting experience and expertise within that department for a long period of time and that promotes the skills and this process of following the functional design also ensures that we recruit people who have a particular type of skill. So, in both ways in the recruitment as well as in the general functioning the functional form of organization design promotes skill specialization. It reduces duplication of scarce resources and uses the resources full time. Since the task of the people are very clear and well identified, they have to continue to work in this task and another person has to do another task or another vertical has to do another work that clarity ensures that there is no duplication of the scarce resources and within the function people keep working and getting expertise. When function grows, people can also grow in terms of their career advancement when organizations keep growing and they keep having functional design, people get opportunity to be promoted from the worker to supervisor to foreman to or from assistant manager to associate to the deputy manager or senior manager. So, as the organization keep growing and keep following the functional design, managers get the opportunity for the career development within that function. So, they keep building their expertise and they can also do their career advancement when there is a functional design operating in an organization. Another point about the functional form is that it facilitates the communication and performance because supervisors share expertise with their subordinate. So, within the function, all the people are familiar to that particular kind of function and that is the specialty of a functional organization and that facilitates the communication. People are able to connect with each other because they are doing the similar work and when they are able to connect and communicate with each other, all of them learn from each other and the expertise keep growing. Another benefit of functional form is that it exposes a specialist to others within the same specialty. So, it exposes the specialist and that makes when people are working in the same function year after year, they can connect to the experts in that field even if they are not in the organization, they have exposure to those specialists who are working the similar task and they can identify their competency with respect to professionals working in that similar function even in different organization. These are the advantages of functional functional design of organization and that is why many, many organizations start their operations at least if not continue they start their operations as a with the functional design, but functional design also have also has some disadvantages. For example, functional design emphasizes the routine task. People have to keep on working same task within the function month of the month quarter after quarter and at times years after years. This fosters the parochial perspectives by managers and limits the capacity for top management position. When managers keep working in the same function, many managers develop the parochial perspective that means their perspective, their ability to make judgment becomes restricted to that function itself, but we know that SBU head or organization head cannot afford to have exposure to only one function. They have to make decision about various functions, but people or particularly managers who have exposure to only one function may find it difficult to handle the generalistic role of the head of the organization because at the head of the organization they have to understand roles and responsibility of other functions as well. They need to have appreciation and understanding about other functions as well, but if the person is so practiced and so habitual to stick to that or his function then it becomes difficult for that person to hold a organizational responsibility. It is not that always it happens, but people working in the functional role year after year there is a possibility people may develop this tendency. Third disadvantage is that it multiplies the inter departmental dependencies. These people know the job about their department only, so they cannot handle at times even the simple problems and challenges which are not within their department which are related to the other department. So, that increases the coordination and the scheduling difficulties. Since one function is not familiar or very less familiar to the other functions and that is why they are deeply interdependent for any combined task there has to be lot of coordination and scheduling required in the functional organization. Obscures the accountability for the overall rules that is the another disadvantage of the functional organization. Many a time people develop this tendency of silo working that means they take accountability only for their specific output and they do not they obscure the general accountability for the overall result and because of that at times organizations suffer or at times customers suffer. The services of products are offered to the organization to the customers as a complete whole. It is not offered as a marketing product or operations product, product or services to the customers is offered as the combined result of different functions. In that situation if people are habitual of taking accountability of their function or their role only and they do not have the broader perspective that may hurt the customer experience. So, that is the another disadvantage of functional form. Now, let us look at another organization structure. This organization structure is of the famous telecommunication company Airtel. You can see that chairman and the managing director is Mr. Bharti, then there is a CEO and joint managing director. But if you look at the line below the position of the joint managing director there is a president of mobile service, there is a president of telemedia service, enterprise services, customer services, supply chain etcetera. What do you make out of this diagram? We do not see here the production head, marketing head, operations head etcetera etcetera means the designations related to specific functions reporting to the CEO or the joint managing director. So, this type of organization, this type of organization design where the first layer of organization design after the business head is about not functions, but the services of products being offered. So, these mobile service, telemedia services are different lines of business in the Airtel. These heads are responsible for the business in their line. So, for example, president of mobile services is responsible for the mobile subscription, the sales target of the subscription profitability of their services etcetera. Similarly, telemobile services person would be responsible for the operations of the managing their human resource of managing their profitability of managing their quality etcetera. So, you can see these people who are reporting to the business head are not responsible for a specific function, they are responsible for the service or a product line. When this is the situation about the organizational structure, we call it divisional organizational structure. The divisional organizational structure meaning the business functions are divided first according to the geography or according to the business products or the product lines. And they are responsible for the geography or product or product line and reporting to them would be the functional heads of those products, product line or in the division. This is called the divisional organization design. When organizations grow, their operations grow when their product line increases or their product are sold in different parts of the world in large number of countries, organizations cannot afford to work just as functional organizations. They have to divide their function according to the geography or according to the product or product line. This is how the divisional structure of the organization emerges. It has its advantages also the disadvantages. The advantages the first among the advantages is that divisional form recognizes the inter departmental interdependencies. So, they ensure that within one business unit, within the one business line, there are multiple departments operating and they are operating in an interdependent way. Divisional form fosters an orientation toward overall outcome and the clients. So, here if the head of the mobile phone or head of the telemarketing or tele services is reporting to the business head, they cannot talk about a specific function. They have to talk about their overall outcome and that is being promoted in the divisional structure. It allows diversification and expansion of skills or training. When there is a divisional structure, there is a more probability for at least few managers to move from one function to the next function. Get the exposure, diversify their skill or at least diversify their training because people will be more exposed to the other functions as well along with the function they are engaged into. So, this is the benefit of the divisional form of organization over the functional form of organization. Both divisional form ensures the accountability by departmental managers and promotes the delegation. It ensures that people take the, their managers take the responsibility or they have accountability for the general business results and for that business leader has to delegate authority to them. Divisional structure also heightens the departmental cohesion and involvement in the work. People know that they will be evaluated as the business line, they will not be evaluated as a function. So, there is a heightened interdepartmental cohesion and involvement in the situation. Divisional structure or divisional form of organization has certain disadvantages as well. May use skill and resources inefficently, how it is possible? You can see that there are just for example, we looked at the structure of the Airtel, tele-services function and mobile function and other functions. In all the function you will have marketing people, you will have sales people, operations people and finance people and so on. During a time different verticals might be hiring the multiple talents and maybe few talented people would be competent enough to handle the functions of these different divisions. So, if that divisioning is not done very consciously and human resource planning is not done very consciously, divional structure may promote the inefficiency because of the duplication of the resources and expertise. It limits the career advancement by the specialist. Some people have the tendency to be specialist. For them there are less opportunities in the division structure because division structure after certain level of hierarchy promotes the interdepartmental group. Third division structure impedes a specialist exposure to others within the same specialties. A large number of people are not specific to or wedded to a function. They at times do not take the advantage of exposure to the expertise of different people in the same function. Another disadvantage is that division structure puts multiple role demands upon people and creates stress. Division structure promotes multiple role demands. People need to be well versed with not only their immediate function, but also their neighboring function also the function to which they are giving their output as input. So, people have to know and have appreciation for the different functions and that is that may cause a stress at times. If the resources are less and the division structure is operating, one resource or one human resource has to take care of the multiple functions and as a result of that it there might be more stressful situation at the workplace. Division structure may also promote the departmental objectives as opposed to the overall organizational goals. In a division structure, many a time their general goal is taken precedence or more importance than the functional goals. At times, this situation may result in not following the specific process most stringent processes within their function. So, these are some of the disadvantages of the divisional form of the organizational structure. Another example of the divisional form of the structure, the sales and marketing operations, design, office of the chief technology officer may be common in the mobile phones, smart devices, location and commerce. So, and so this is example of the Nokia Siemens network where you will see people working in the sales and marketing might be having two bosses. They might have to relate, they may have to relate, they may have to report to the head of the mobile phone or smart devices and they also have to report the corporate development or the corporate office of the marketing function. This is example of metrics organization structure. In the metrics organization structure, there is a functional manager, there are project manager and there are project teams and executives are there in the organization structure. So, you can see in the metrics structure people are part of their team or department or the project and they are also reporting to the head of the organization or the organizational head or the business head. So, there are dual line of commands operate in the metrics organization structure. This is one example where the president or CEO has VP finance and VP human resources reporting to and there are two other senior VPs related to programs and operations are also reporting to, but if you look at the person who is located and who is here in this block will have to report to the VP research as well as the program manager navigation system or person located at this place will have to report to the VP engineering and also the program manager of the space system. So, this is example of a metrics organization one even simpler example can be of a construction company you can imagine a large construction company which is having projects large projects which worth of hundreds of crores in different parts of the world or in different parts of the country. People working in that project may also be having operations, finance and quality functions and the corporate office of that team or corporate office of that organization may also have the quality finance and HR team. And many a time people may have to interact may have to report to the bosses and authorities within the project which might be localized and they have to also report for certain decisions to the heads in the corporate office as well. So, this is the structure of a metrics organization. Metrics organization also has certain advantages and certain disadvantages. Metrics organization has the advantage because it makes the specialized functional knowledge available to all the projects. There is a organizational head who is very competent and expert and specialized in specific function they can give the benefit of their expertise to the people working in different projects. It uses people flexibly, people can work in the project, people can also move to the corporate office. It maintains the consistency by forcing communication between managers. They have to interact and communicate with the multiple managers to report on the specific item related to their project and related to their organization. Metrics structure also recognizes and provides the mechanism for dealing with the legitimate multiple sources of the power. Since people working in the metrics organization have to report to the multiple bosses, multiple supervisors they have to deal with the different people with the varying kind of authority in a specific way. It can adapt to environmental changes. Metrics structure since it is localized or since it is specific to a project at the same time it is connected to the larger organizational functions. They have more flexibility to maneuver their path and respond to the project requirement or the customer's requirement. So, it is a very important thing to do in order to make sure that there are disadvantages as well of the metrics organization. Number one it can be difficult to implement. Metrics organization or complex organization structure and if you remember in the very beginning we said that span of control, unity of command, centralization and decentralization are the challenges and have to be decided a priori to the extent possible to avoid decentralization. We need to identify the structure of the job, we need to identify the span of control a priori authority and centralization and decentralization a priori without before the establishing the organization. So, it can be difficult to implement because we may not be able to foresee all the requirements. It at times also increases the role ambiguity. My project boss says something and my corporate boss may say something different. It might result in stress and anxiety to me. Performance is lowered without power balancing between projects and functions. If the project head and the functional head who sits in the organizational head office if they have very significant power difference then employees have to do the power balancing and in that process the performance may be lowered employee at times have to go by what so called the most more powerful boss says, but what more powerful boss says may not be the best thing for the corporate office or for the project. So, this at times may lower the performance. Next point is that it makes consistent demands and can promote the conflict and short term crisis orientation. The supervisors and managers in the project side or on the corporate side may have different understanding about a situation and as a result of that may pose inconsistent demands and that can promote the conflict them and short term crisis. Last but not the least metrics organization may reward the particle skills over technical skills. Lot of time at times is spent in just communication to the different bosses and different supervisors. If I have to spend lot of time on managing and communicating with my different supervisors naturally I am employee may be left with lesser time to focus on the task in their hand and this process may result in the rewarding those people who are good at this kind of communication rather than rewarding those employees who are good at work and may not be as good in the communication and communicating with the two supervisors. So, this is one of the disadvantages of the metrics structure.